What process does the court take to ensure that a property settlement is just and equitable?

by The Findlaw Team

When a marriage comes to an end, there are a number of matters that need to be considered, with one of the biggest issues related to how property is to be dealt. Property matters can be dealt with privately or the court can issue a property order. In the event that the court has to make a decision in relation to a property order, there will be a process that will be undertaken which this piece will cover.

The just and equitable threshold

Prior to the High Court decision in Stanford v Stanford (2012) 247 CLR 108; HCA 52, the courts relied on the four step process based on s 79(4) of the Family Law Act 1975 (Cth) (the Act) which provided guidance as to how the court should apply a “just and equitable settlement”. However, with the decision in Stanford, there is now a threshold question that also needs to be raised before the application of the four step process.

The High Court in Stanford recognised for the first time that it shall not make a property settlement order unless it is satisfied that it is “just and equitable”. The Court came to this conclusion because it recognised that property orders can potentially modify legal and/or equitable rights to property, and it can also have an impact on third parties.

In Stanford, the Court outlined three fundamental propositions that must not be obscured, which were:

consideration whether it is just and equitable to make a property settlement order by identifying according to ordinary common law, and equitable principles, the existing legal and equitable interests of the parties;

in relation to property settlement, there is no special right to a settlement that arises from family law;

when determining what is just and equitable, the court isn’t exclusively reliant on s 79(4) of the Act, but rather, the surrounding circumstances of the parties.

The four step process

Stanford did not alter the four step process as stated in s 79(4) of the Act, but rather, it makes it a condition that when applying the process for a property order, it is to be just and equitable.

The four step process briefly encompasses the following:

The identification and valuing of all assets and liabilities which form the global pool of property subject to settlement.

Assessing the financial contributions of all relevant parties to the assets of the family. Also, the non-financial contributions such as caring for the child to name one example. Finally, some assessment of negative contributions, which can include matters such as family violence or substance abuse issues.

Consideration of the future needs and resources of the relevant parties.

The answers relating to the first three steps and the consequences of any relevant orders that may be made taking into account the fairness, and the surrounding circumstances of the relevant case.